Court ruling 'sets a new benchmark for privatisations'

General News - Saturday December 15, 2007

Court ruling 'sets a new benchmark for privatisations'

YUTHANA PRAIWAN

The Supreme Administrative Court's ruling on the privatisation of PTT has set a new standard and benchmark for future state enterprise privatisations, Energy Minister Piyasvasti Amranand said yesterday.

''This case sets a benchmark for the future, that the privatisation process must be fully transparent, comply with due process and have acceptance from the public,'' he said in a press briefing after the court ruling.

The court, while reaffirming PTT Plc's status as a listed public company, said its gas pipelines and expropriated land must revert to the state as national assets.

He said the ministry will seek cabinet approval for a proposed plan to transfer PTT's pipeline assets to the government to comply with the Supreme Administrative Court's ruling yesterday.

If the cabinet approves the plan, the Stock Exchange of Thailand (SET) may allow investors to resume trading in PTT shares, said Mr Piyasavasti.

PTT executives and state regulators are expected to work through the weekend to finalise details of the transfer.

Mr Piyasvasti said there is still uncertainty over the extent of the assets that need to be transferred to comply with the court order, considering that PTT has made considerable investments in the pipeline infrastructure since its 2001 privatisation.

''We will find out which assets will need to be transferred and which ones will not,'' he said.

According to PTT president Prasert Bunsumpun, PTT's gas network and related infrastructure have an estimated value of 100 billion baht out of the group's total assets of 900 billion. Revenue from the pipelines total about 20 billion baht a year compared with total group revenues estimated at 1.4 trillion this year, Mr Prasert said.

PTT will also need to hold talks with the Finance Ministry about tax liabilities from the transfer, estimated to be as much as 10 billion baht. Authorities will also have to fix new rental rates for PTT's future use of the gas network.

Mr Piyasvasti said that in order to prevent any disruption to PTT's energy operations, legal compliance with the court ruling will have to be completed before the Dec 23 general election.

The government will also speed up work on establishing a selection committee responsible for appointing members of the new energy regulatory body.

The Energy Business Act, which took effect last Tuesday, requires that the independent regulator be established within 120 days. The new body will over see not only the country's gas pipeline network, but also other related energy infrastructure, such as the electricity transmission grid.

The regulator is also authorised to grant usage rights for national infrastructure, including gas pipelines.

PTT, which is 52% held by the Finance Ministry, could conceivably submit a bid to buy back the assets later, although operational control would remain with the independent regulator.

On the SET, officials said PTT shares would remain suspended until at least Tuesday after formal clarification of the impact of the court ruling on the company's operations.

Bangkok Post